New York Appellate Panel Issues Permanent Stay to DraftKings and FanDuel

Daily fantasy sports (DFS) leaders DraftKings and FanDuel can continue to operate in the state of New York for at least half a year, as a four-judge state appellate panel issued a permanent stay Monday against an injunction issued against the sites.

That injunction was levied a month ago by New York Supreme Court Judge Manuel Mendez, agreeing with New York Attorney General Eric Scheiderman, who declared DFS to be illegal gambling in the state. That same day, though, the sites were granted an emergency stay, allowing them to continue operating through 2015.

With the permanent stay, DraftKings and FanDuel are now free to keep accepting New Yorkers’ action until their appeal is heard in the state Supreme Court. That court date probably won’t be until late summer.

Next to DFS formally being declared legal, this is about as big of a victory as the DFS sites could hope for, as Eric Schneiderman is on a mission to shut them down. It is estimated that New York makes up about 10 percent of the sites’ customer base, so even having to shut down New York operations for only a short time could have severely hurt their businesses. On top of that, other states are likely watching, so negative outcomes in New York could influence what lawmakers do about DFS in other states.

As is FanDuel’s practice, the company posted a statement on the ruling on its website:

We are grateful for the legions of New York fantasy sports players that the permanent stay entered today ensures they can continue to participate in our games here as the case progresses. We are confident that fantasy sports have always operated lawfully in New York, but we do believe that new, common-sense regulations to protect consumers and reflect the evolution and growth of the game are needed. The New York legislature, like many states around the country, is working towards such regulation, and we will work with them to achieve it.

And DraftKings, as usual, issued a statement through its legal counsel, David Boies, posted on DraftKings’ news and blog site:

We are pleased with the Court’s ruling today. Daily Fantasy Sports contests are as legal now as they have been for the past seven years that New Yorkers have been playing them. As our litigation continues, we expect an appellate court to see what we have known since the outset: DFS is a game of knowledge and skill, one that builds community and whose competitive spirit has become important to the lives of millions of people. Our ongoing appeal will make clear that daily fantasy contests require just as much skill as season-long contests, which the Attorney General recognizes as perfectly legal under state law.

We are engaged with legislatures and Attorneys General across the country, including in New York, to ensure that our fans are able to experience our contests in a fun and fair way with appropriate and thoughtful consumer protections in place. This includes active collaboration with the Attorney General in Massachusetts, where we are working to become the industry leader in transparency and consumer protection. We will continue in these efforts so that fans can keep enjoying Daily Fantasy Sports for years to come.